TaxTMI 
TaxTMI 
1968 (11) TMI 85
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....rt and have been entertained by special leave. The relevant assessment years for the purpose of levy of sales tax are from April 1, 1957, to March 31, 1958, and April 1, 1964, to March 31, 1965. For the assessment years prior to April 1, 1959, the enactment in force was the C.P. and Berar Sales Tax Act, 1947 (21 of 1947), and for the subsequent two years it is the Madhya Pradesh General Sales Tax Act, 1958 (2 of 1959), which would be applicable. The material facts may be shortly stated. The assessee, the Madhya Pradesh Electricity Board, hereinafter called the "Electricity Board", is a body constituted under section 5 of the Electricity Supply Act, 1948. Under section 18 of that Act it was the general duty of the Electricity Board to promote coordinated development of the generation, supply and distribution of electric energy within the State of Madhya Pradesh in the most efficient and economical manner. In the assessment years in question the Electricity Board sold, supplied and distributed electric energy to various consumers. It also sold coal-ash, a waste product and supplied steam to Nepa Mills of Burhanpur. It further supplied specification and tender forms on payment t....
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.... 21 of 1947 or section 2(d) of Act 2 of 1959 in respect of its activity of generation, distribution, sale and supply of electric energy. On the second question it was held that as the Electricity Board regularly and continuously produced coal-ash as a subsidiary product and sold it regularly it was a "dealer" in regard to the sale of coal-ash and the sale transactions relating to this product were liable to be assessed to sales tax. The third question was answered in favour of the Electricity Board. It was found that steam was not being supplied to the Nepa Mills with profit-motive although it fell within the definition of "goods" given in the two Acts. As regards the specification and tender forms the High Court was of the view that the Electricity Board was not carrying on any business of selling such forms and therefore no sales tax could be levied in respect of them. The fifth question was answered by holding that as the Electricity Board was not a "dealer" in respect of sale and supply of electric energy it was not entitled to purchase any taxable goods for consumption or use for producing such energy without paying sales tax to the selling dealer under section 4(6) of Act 21 ....
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....y", which has not been defined in the two Acts, given in section 2(24) of the Madhya Pradesh General Clauses Act. It has been defined to mean "property of every description, except immovable property". Section 2(18) of that Act says that "'immovable property' includes land, benefits to arise out of land and things attached to the earth, or permanently fastened to anything attached to the earth". The High Court went into a discussion from the point of view of mechanics relating to transmission of electric energy. It was of the view that electricity could not be regarded as an article or matter which could be possessed or moved or delivered. It relied on certain decisions which will be presently noticed and referred to entries Nos. 53 and 54 in List II of the Seventh Schedule to the Constitution and held that electricity did not fall within the meaning of "goods" in the two Acts and therefore the Electricity Board could not be held to be a "dealer" in respect of its activity of generation, distribution, sale and supply of electric energy. Mr. I.N. Shroff has relied on certain decisions in which the same point was involved as in the present case, namely, whether electricity is "....
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....in other energy-giving forms. Electric energy may not be property in the sense of the term "movable property" as used in the Punjab and Central General Clauses Acts in contradistinction to "immovable property" but it must fall within the ambit of "goods" "even if in a sense it was intangible or invisible". As pointed out in the Madras case the statement contained in 18 Am. Jur. 407 18 Amercian Jurisprudence 407., recognises that electricity is property capable of sale and it may be the subject of larceny. In Naini Tal Hotel v. Municipal Board A.I.R. 1946 All. 502. , it was held that for the purpose of article 52 of the Indian Limitation Act electricity was property and goods. In Erie County Natural Gas and Fuel Co. Ltd. v. Carroll [1911] A.C. 105., a question arose as to the measure of damages for a breach of contract to supply gas. Lord Atkinson, delivering the judgment of the Privy Council, applied the same rule which is applicable where the contract is one for sale of goods. In other words gas was treated to be "goods". The High Court, in the present case, appears to have relied on Rash Behari v. Emperor A.I.R. 1936 Cal. 753., in which approval was accorded to the statemen....
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....y like any other movable object we see no difficulty in holding that electric energy was intended to be covered by the definition of "goods" in the two Acts. If that had not been the case there was no necessity of specifically exempting sale of electric energy from the payment of sales tax by making a provision for it in the Schedules to the two Acts. It cannot be denied that the Electricity Board carried on principally the business of selling, supplying or distributing electric energy. It would therefore clearly fall within the meaning of the expression "dealer" in the two Acts. As regards steam there has been a good deal of argument on the question whether it is liable to be assessed to sales tax in the hands of the Electricity Board. According to Mr. Shroff the Electricity Board carried on the business of selling steam to the Nepa Mills and that this has lasted for a number of years. It has been submitted that simply because the Electricity Board does not have any profit-motive in supplying steam it cannot escape payment of sales tax because steam is nevertheless being sold as "goods". The High Court was of the view that the water which the Nepa Mills supplied free to the Ele....